Pfizer sees rare opportunity as it purchases maker of prostate cancer treatment Xtandi, adding to its portfolio in a lucrative medical area
Pfizer will pay about $14bn to buy cancer drug developer Medivation in a cash deal aimed at fortifying its hold in one of the hottest and most lucrative areas of medicine.
The New York drugmaker said on Monday that the acquisition would stock its product portfolio with leading treatments for the most common cancers in men and women by adding Medivations pricey prostate cancer treatment Xtandi to a lineup that already includes the breast cancer drug Ibrance.
Pfizers CEO, Ian Read, called the acquisition a rare opportunity to add an established treatment and a pipeline of drugs under development.
Medivation presents an attractive target as a specialty drugmaker focused on developing medicines for cancer and serious diseases with few treatment options. Earlier this year, it rejected a $9.3bn offer from the French drugmaker Sanofi.
Pfizer, best known for mass-market drugs such as the impotence pill Viagra and the cholesterol fighter Lipitor, began pursuing cancer drugs well after most industry leaders. It has been furiously playing catch-up, mainly through partnerships with university researchers and other drugmakers.
Last year, Medivation brought in $943m in revenue, mainly through Xtandi, which it sells in partnership with the Japanese drugmaker Astellas Pharma.
Xtandi has drawn attention from the public interest group Knowledge Economy International, which has protested at the $129,000-a year list price for the treatment. The US government covers much of the cost for Xtandi prescriptions filled under federal health programs such as Medicare, Medicaid and the Veterans Administration.
Aside from Xtandi, Pfizersaid Medivation also had a promising pipeline of cancer drugs in late-stage clinical development. That includes the potential breast cancer treatment talazoparib and a potential lymphoma drug. Researchers are also studying Xtandi as a possible treatment for earlier-stage prostate cancers.
Pfizer said on Monday that it will pay $81.50 per Medivation share. Thats a 21% premium to the San Francisco biotechs Friday closing price of $67.19.
The boards of both companies have approved the deal, which is targeted to close in the third or fourth quarter.
The Pfizer-Medivation deal is much smaller than Pfizers proposed $160bn combination with Irelands Allergan, a plan the drugmakers scrapped after the treasury department issued new rules this spring aimed specially at blocking that deal. It was structured as a tax inversion, which means Pfizers headquarters would move, on paper only, from New York to reduce the drugmakers US tax bill.
There has been a push from Wall Street for the drugmaker to break itself up into smaller companies so that it can grow faster. While hesitant, Pfizer has promised to decide the issue by the end of this year.
In the meantime, the company has focused on a series of partnerships and deals showing the company can grow as a whole. And company shares have begun to climb after years in the doldrums.